Gov. Christie and the ARC lies that bind

When New Jersey Gov. Chris Christie killed the flawed ARC Tunnel project in 2010, it came as a big surprise to people in the region and politicians in Washington, DC. With a major funding commitment from the feds, the project was among the largest public works in the nation, and despite its flaws, a trans-Hudson rail tunnel would have greatly improved access into and out of New York City.

Christie cut the cord over budget concerns. He claimed the project’s cost could double. He claimed New Jersey would have to foot the entire bill for overruns. Now, a new report issued by the Government Accountability Office [PDF] accuses Christie of exaggerating, if not outright lying, in his highly political battle over the ARC Tunnel. This was, alleges the GAO, all about politics and gas taxes.

The report by the Government Accountability Office, to be released this week, found that while Mr. Christie said that state transportation officials had revised cost estimates for the tunnel to at least $11 billion and potentially more than $14 billion, the range of estimates had in fact remained unchanged in the two years before he announced in 2010 that he was shutting down the project. And state transportation officials, the report says, had said the cost would be no more than $10 billion.

Mr. Christie also misstated New Jersey’s share of the costs: he said the state would pay 70 percent of the project; the report found that New Jersey was paying 14.4 percent. And while the governor said that an agreement with the federal government would require the state to pay all cost overruns, the report found that there was no final agreement, and that the federal government had made several offers to share those costs.

Canceling the tunnel, then the largest public works project in the nation, helped shape Mr. Christie’s profile as a rising Republican star, an enforcer of fiscal discipline in a country drunk on debt. But the report is likely to revive criticism that his decision, which he said was about “hard choices” in tough economic times, was more about avoiding the need to raise the state’s gasoline tax, which would have violated a campaign promise. The governor subsequently steered $4 billion earmarked for the tunnel to the state’s near-bankrupt transportation trust fund, traditionally financed by the gasoline tax.

Somehow, Christie’s office claims that the GAO report backs up their position. After admitting that Christie fudged some numbers, spokesman Michael Drewniak defended the controversial decision. “The bottom line is that the GAO report simply bears out what we said in the fall of 2010 and say to this day: the ARC project was a very, very bad deal for New Jersey,” he said. It’s tough to make such a sweeping generalization when the final deal hadn’t been completed.

The Times has a bit more:

Mr. Christie further explained his decision by saying that the financing agreement with the federal government required him to declare that New Jersey would pay any costs above the $8.7 billion. That is the standard procedure for full-financing agreements, but the report found that there was no agreement when Mr. Christie canceled the project, and that the federal government, which was already paying 51 percent of the costs, had offered to help with any cost overruns, pledging additional money, low-interest railroad loans and public-private financing.

Before Mr. Christie declared the tunnel dead, his transportation advisers told state legislators that they had discussed taking money from the project to fill the transportation trust fund, which was almost empty. Since then, the governor has steered $4 billion in tunnel money to the trust fund, avoiding an increase in the state’s gasoline tax, the second lowest in the nation.

One of ARC’s earliest supporters, Martin Robins, now with the Alan M. Voorhees Transportation Center at Rutgers, slammed Christie. “In hindsight, it’s apparent that he had a highly important political objective: to cannibalize the project so he could find an alternate way of keeping the transportation trust fund program moving, and he went ahead and did it,” he said to The Times.

This is ultimately a lesson in national politics and local elections. Christie the Candidate vowed support for the ARC Tunnel, but then Christie the Governor gained national prominence in a political party searching for leaders. He canceled the ARC Tunnel near the height of the Tea Party movement as a statement on spending and taxes. He played fast and loose with numbers, and he stretched the truth. The New York/New Jersey region is worse off for it, and it may yet be decades longer, and billions of dollars more, before we see the need for a new trans-Hudson tunnel realized.

40 Responses to “Gov. Christie and the ARC lies that bind”

Unfortunately the residents of NJ will be paying the price for Christie’s decision long after he has moved on to the next stage of his political career. I hope that when he presumably makes a bid for the presidency that people do not forget how he sacrificed the long-term good of his constituents for the sake of his own political future. All so he could credibly claim years from now that he never raised a single tax. But what of the long-term costs to millions of commuters?

He’s a typical reptile demagogue. Fast and loose with numbers and logic to serve his own craven desire for political power. Sadly, as Peter says, it’s the people of NJ that will bear the brunt of his cynical political calculation.

I think if I hear one more thing that Christie’s screwed up, I might have a coronary. We need a governor that doesn’t give more weight to their personal interests versus the interests of the people of NJ. Forget lies about the budget, it’s time to trim the fat from NJ’s government.

Um, it was all paid for, all sewn up, and yet “in tough economic times, was more about avoiding the need to raise the state’s gasoline tax”. So, it wasn’t paid for? The tunnel required a gas tax increase? Ok. How high an increase? Why didn’t Corzine raise the tax as part of his financing plan for the tunnel when he signed off on it and broke ground? Who was “lying”?

It’s also sleight of hand (lying?) to say that NJ is paying some tiny percentage when much of the rest of the money is coming from NJ agencies like the Turnpike Authority. That’s NJ money regardless of how tagged.

The region needs a new cross-Hudson tunnel. There was $1 trillion of stimulus money not allocated to it, and now it’s gone. Keep blaiming the Republican with the weight problem though.

Corzine put funding in place for the ARC Tunnel that required making a choice between either raising tax taxes or picking one of transit or road widening. He opted for transit. Christie wanted road widening and lower gas taxes. So he killed transit. That’s what happened here — political shenanigans for Christie.

If Corzine’s ARC tunnel financing plan required a gas tax increase why was that not disclosed by Corzine or anyone else? Do you even realize what an admission this is? Basically, the Feds and now you are conceding that this plan could only be made to happen by sluicing money forevermore out of ever rising gas taxes. That was not how the project was sold and it’s unlikely it would have ever went forward had it been made public.

The “widening”? The Tpk and GSP widening were commenced by Corzine! The massive Tpk widening project is COMPLETELY toll financed, with extra toll revenue piled on then sloughed off to the NJ DOT and is about 20% of the cost of the tunnel!

And speaking of falsehoods, your map at top states a “doubling” of capacity. ARC is a dead-end tunnel. In no way would it double the capacity of through tunnels across Manhattan to Queens. No one who looked at this in depth would ever make a silly statement about it “doubling capacity”.

The doubling of capacity is always used as to mean now, 2 tubes under the Hudson, with ARC 4. I don’t know whether or not that means 2x as many trains can actually use the 2 new tunnels (i.e. terminal capacity at the other end as well as length of 4 tracks in NJ).

Christie’s view, and 1 that I don’t share, is probably something like, why should I support and pay (in part) for a tunnel that will only expedite and encourage my residents to work in another state? That only further lessens the tax base by the way because NY will collect income tax on those salaries.

Thus an argument could be made that NY should pay more towards the tunnle because it will ultimately enable more tax revenue. That’s for the actuaries and mathemeticians to determine the exact amount.

Clearly though the jobs center is NYC and there is insufficient access now, so a new rail tunnel in some form is needed (and not the 7 and not the L).

“why should I support and pay (in part) for a tunnel that will only expedite and encourage my residents to work in another state?”

That sort of nonsense is peddled quite a bit. NY takes similar parochial stances on issues. I do find it surprising that NJ commuters into NYC can’t develop and organized constituency to get something done. I’m not sure whether this is because there just aren’t very many of them relative to NJ’s total population, or because they don’t fully appreciate the issue themselves. I explain to people stuck in airport delays that the airports are capacity constrained and their eyes just glaze over, so maybe people just sort of assume that infrastructure is somehow immutable.

An NJ passenger rail association was one of the organizations that pushed ARC. Actually, as far as advocacy went, they did pretty well for a while, I think.

Generally speaking, though, they were a fairly parochial and reactionary lot themselves. Much of their desire to have commuter service to GCT was probably to avoid the indignity of having to sit with blacks on the E Train. They probably were the types of cretins who drank Christie’s teabagger KoolAid on fiscal issues, and no doubt got spanked for it when he got around to putting their pet project on the chopping block.

(I stopped following them after the ISP usenet purge in 2007 or so. Actually, that was Cuomo’s fault.)

Concur with Eric F re: “doubling” of capacity. It wasn’t going to be. NJT public relations was fairly clever in avoiding those exact words itself to great degree, but NJT sure didn’t try to stop or correct others who did.

The tunnel didn’t require a gas tax increase. What a gas tax increase was needed for was the state’s Transportation Trust Fund, which is the main funding source for road and transit projects in the state (but wouldn’t have gone to ARC).

The TTF was on the verge of bankruptcy thanks to decades of borrowing. Christie canceled ARC and used the Port Authority and NJ Turnpike Authority money that would have paid for the tunnel to bail out the Trust Fund instead.

There is no doubt that had Corzine won re-election in 2009 that NJ would be looking at much higher gas taxes directed to ARC. That’s just what would have happened. I think that idea is quite popular on this site, but whether it’s a good idea or not there was no way to finance ARC given federal funding commitments than via gas tax money.

One of the overlooked points in this report though is that the feds hadn’t told New Jersey that the state would be solely responsible for any cost overruns. In fact, it appears that the opposite was true. Despite Christie’s statements to the contrary, the feds were willing to give more money and get creative with the financing in the face of cost overruns. That’s the point there.

My understanding is that the feds would “work with” the state on overruns and the like. Maybe they would, but who knows what would actually happen? It’s a difficult plan to commit to under the circumstances.

By the way, I think Christie has done a fair amount of good as governor, but I think killing ARC in the way he did it was a lousy decision. There were other solutions that could have at least advanced NJ infrastructure. To me, the obvious half-way solution would have been to offer to divert the NJ and federal money to the Portal Bridge project and some ancillary NEC work. Portal is a necessary element of the overall ARC plan anyway, and it would have the effect of making the NEC bottleneck much smaller and advance the goals of ARC, by setting the stage for future tunnel building. Those more creative than me can think of other compromise solutions. Instead we get a bunch of guys making statements and were stuck with no improvement in the physical plant of the NEC.

Someone, and I’m not quite sure who, decided to lump the Portal Bridge project in with ARC, and tied the fate of both together, even though they were conceived as separate projects.

Portal was agreed upon as being necessary by everyone involved, even as its own costs rose significantly over the proposed cost (and revised estimate puts it close to $1.7 billion from the $1.34 billion just a few years back). Yet, no one has figured out how to get that non-contentious project funded despite the dire need to eliminate that bottleneck.

I thought it was the opposite: namely, Portal was separated in order to separate the cost to cut down on ARC sticker shock. I believe a contract was signed up for final design on Portal, which should be done by now. I’m not aware of any funding being allocated to actually building it. In the absence of ARC, one question is whether both new Portal spans would be built or whether they’d just construct one. My own view is that both should be built even if one is devoid of any track until ARC/gateway gets off the ground.

This struck me as fairly nonsensical. ARC supporters are arguing that the totally unfunded status of the (practically certain) cost overruns was a reason NOT to cancel the project? Christie’s opponents are working overtime to make this story stick against him, but it’s a pretty weak argument – semantics not content. Christie’s basic point that New Jersey was exposed to the cost overruns, potentially in their entirety, isn’t debunked by the report.

So far as I know, any expected potential overruns were in the cavern terminal. Christie really, really could have pushed to get rid of that stupid component of the project. Had he done so successfully, he really could be praised as someone with the fiscal discipline Republikans pretend to have. Had he failed, he at least could have canceled the project with some modicum of intellectual honesty. Instead, he imposed greater costs on the future so he could shake his stubby pecker at his political opponents in the present.

Besides, if the project did go on, and there were overruns, why wouldn’t Christie be to blame for them?

Not quite. Christie wanted the money, he just wanted to spend it on something that suited his immediate purposes and political goals, not something that benefits the whole East Coast and the tri-state economy.

He took a good chuck of the ARC money and put it into the NJ road budget so NJ road maintenance could be done with Federal dollars rather than their own. Basically it’s take someone else’s money to use for local projects and claim credit for keeping the local gas/road taxes down. If you live outside NJ and pay taxes, that’s *your* money.

What didn’t get done was uncorking a 100 year old bottleneck in the transportation network. Like the existing 19th century tubes, the ARC tunnels if built would be used for another 100 years. Repaving/widening a few roads in NJ is consumable work that will be worn out in less than 10 years.

There’s nothing “conservative” about trading long term investment for some paving contracts. It bought Christie some votes with tax $ from all 50 states. (or 57 😉

I would have given Christie some respect if he’d said “Sure we need to fix this, but why are we spending $XXX when in any other country it could be done for 2/3(XXX). Having a crew of 23 on a TBM, construction workers making $100K, police details watching a hole in the ground, buddies, cousins, campaign contributors getting the contracts are worthy reasons to make noise.

You won’t see libservative, conservatroll or Republicrat politicians tackling any of that. Waste is the fuel their machines run on; if your money was spent efficiently they’d all lose their constituency. Neither unions nor contractors want a competitive free market where they do a dollar’s work for dollar’s income. People don’t hire (contribute) to a politician that gives them nothing back; they all want more than one slice of pie. A real leader would figure out how to promise everyone 1.1 slices but actually make them work 110% for it.

The report by the Government Accountability Office, to be released this week, found that while Mr. Christie said that state transportation officials had revised cost estimates for the tunnel to at least $11 billion and potentially more than $14 billion, the range of estimates had in fact remained unchanged in the two years before he announced in 2010 that he was shutting down the project. And state transportation officials, the report says, had said the cost would be no more than $10 billion.

Show of hands — Based on the initial/final costs of the Second Avenue Subway project and East Side Access, what are the odds that the low estimate here is the correct one (the city is bringing the 7 extension in roughly at cost, but that was done by killing off the 10th Avenue station).

That doesn’t mean there wasn’t a bit of disingenuous slanting-the-numbers on Christie’s part, but the GAO report seems to take the estimates in the ‘rosy scenario’ direction based on the historical cost estimates vs. final costs of major infrastructure projects in the Metro NY area (throw in the Big Dig in Boston if you want to expand the problem to the regional level).

We’ll see coming up what Christie’s position of the Amtrak Gateway project is, and when the Parsons Brinckerhoff study comes in, New Jersey will have one final chance to revive the 7 extension option, by agreeing to pay (as they should) the bulk of the cost of running a tunnel under the Hudson and to Secaucus from the tail tracks at 25th Street and 11th Avenue. If nothing else, non-committal, or outright rejection, of New Jersey pitching in $$ to either ARC alternative plan will become a campaign issue next year.

The project was originally budgeted for at $7 billion, and the GAO seems to be saying that it would have cost closer to $10 billion. I don’t think that’s an outrageous estimate based on SAS’s and ESA’s cost overruns. They’re disputing Christie’s claims that the project would have cost up to $12-$14 billion.

DOT was estimating final costs of up to $12.7 billion right before Christie killed ARC. The cynic in me just says when you’re dealing with estimated government cost overruns, it’s always safest to take the high number, when the cash involved not directly coming out of someone’s pocket.

The city, not the MTA or the feds, had to pony up the bucks for the 7 extension, which is why the 7 extension’s costs didn’t go wild, even if it was at the expense of a needed in-between stop. But a bi-state project doesn’t have the same cost-control options.

ARC as it was in its final incarnation was a poorly thought-out deep cavern terminal, and with no bi-directional connections via either a link to Grand Central or the Penn Station East River tunnels meant the batcave under Macy’s was only going to be directly beneficial to New Jersey commuters. There was no way to spread out any cost overruns to neighboring states or the feds, via improved Amtrak or other commuter rail regional operations for those states or the government’s rail company. New Jersey was going to get stuck with the full tab, which is why in hindsight, Alt-G would have been the better option, and either Gateway or even a salvaged 7 extension going forward is something worth making into a 2013 campaign issue.

Ben, you have been tracking the progress on a minor element of east Side Access: opening a new entrance to GCT at 245 Park Ave. That project got started late, and then was scheduled to be done in 18 months from March of 2010, finishing in September 2011. It is now April of 2012. Can you post a photo of the completed entrance for us? That’s a trick question.

The GAO isn’t saying the project would have cost closer to $10bn, that’s the spin of the Times reporter. The GAO report just quotes other cost estimates, the most recent being the FTA’s $9.8-$12.4 billion. It then shows a chart (on page 17) explaining how in project planning, implementation cost is often higher than the top of the range quoted during the development stage. In that regard, an estimate of $12-14 billion in potential final costs seems reasonable enough.

The FTA offered its own cost estimate ranging as high as $13.8 billion, or $5 billion more than the $8.7 billion agreed cost. The FTA seemingly backed off that, even as they noted throughout their own analyses that NJ Transit couldn’t contain costs.

NJ Transit has repeatedly shown itself incapable of containing costs. The Secaucus Junction boondoggle was supposed to be $80 million. It ended up being $450 million and serving a fraction of riders guestimated by the agency. Even after finally getting the parking lot it still is on the low end of estimates for ridership.

But even if we stick to a $10 billion price tag, NJ taxpayers would be on the hook for at least $1 billion overruns. The feds only ponied up about $300 million or so, and offered NJ debt financing to cover the rest. If the feds were convinced that the costs could be contained and wanted the project to go ahead, they could have picked up the costs on this interstate project. After all, it was shovel-ready and could have fit the transit initiatives by the Obama Administration, but they knew better than to go ahead with this considering that their own cost-overrun analysis showed that the costs would end up being far higher than the NJ Transit estimates.

Add to that the fact that even if the project was built, NJ Transit simply doesn’t have the money to operate the new facility. It’s cut service, not added it, even as raising fares. It would likely cut service to Hoboken and otherwise shift service to bring trains to the new termination point at Herald Square, instead of adding new trains for the so-called one-seat ride.

That doesn’t touch upon the higher costs NJ Transit would bear as a result of having to run trains back to New Jersey for storage because there’s no room for tail tracks and storage in Manhattan (or through to Sunnyside Yards) in the ARC plan. It would increase train congestion because of a lack of storage, and trains would move without paying customers on board.

In total, it was a poorly conceived plan that doesn’t reflect the needs for true interstate integration of mass transit and HSR, which are done far more responsibly in the Gateway proposal.

We can argue all day about how great the cost over-runs would have been and who would have been on the hook for them. The fact remains that this plan was flawed from the start: the Manhattan terminus linked to nothing. There needs to be another tunnel (at least one more) under the Hudson, but ARC was never the right answer. And when you look at the political considerations at work at its start (Obama administration needed a “shovel ready” project, Corzine needed a ribbon-cutting), the plan stinks even more. Christie did the right thing, even if it resulted in his own political gain.

I’ll depart from you in one element: Obama had nothing to do with it. Corzine launched it knowing full well that the financing plan was absolutely destined to fail. The feds were offering a consistent level of support across Bush and Obama. The Obama failure was one of seizing an opportunity. By devoting 1% of his stimulus he could have ensured full funding of the tunnel and the Portal Bridge project. Now, by 2012 much of the construction would be visible and Portal almost done. Millions of train passengers would see a gorgeous new rail bridge rising along their train route. Instead they sit on idle trains waiting for a drawbridge to close or a tunnel delay condition to abate.

In the ’80s, New Jersey established the Transportation Trust Fund to pay for the transportation and transit improvements and the rehabilitation of roads and bridges. Certain taxes, including a portion of the gasoline tax, were allocated to the trust fund, and it was sold to the voters as a pay-as-you-go deal — projects would be paid for based on the availabity of trust fund monies.

Instead, the state’s politicians borrowed against the trust fund. And they did it not only to pay for updgrades and expansions, they borrowed to pay for the kind of normal maintenance that’s supposed to be covered by the regular operating budget. This was utterly irresponsible.

We’ve now reached the point where all the revenue allocated to the trust fund has to go toward servicing the debt on past projects. That means there is not a cent available for any improvements to the state’s exsiting infrastructure, which is some of the absolute worst in the country.

Gov. Christie could have built an expensive tunnel into a catacomb under the West Side of Manhattan and let the rest of the state’s infrastructure rot. Or he could have taken the money that would have gone to this half-baked ARC plan and used it for urgent current needs while avoiding tax hikes that would have added to the already onerous overall burden shouldered by the working taxpayers of New Jersey in the middle of a peristent economic slump.

I’m fine with his decision.

Also, I don’t care what the GAO says — if you think there wouldn’t have been signficant cost overruns, you’re kidding yourself. And I don’t care if New Jersey was going to pay for those overruns or Washington. Federal dollars don’t appear magically — they come out of the pockets of taxpayers, too.

One nice thing about reports like this is they break down a lot of numbers that are otherwise buried in impact statements and their many revisions.

For instance, the GAO estimates that by 2030, all considered, building (vs. the no-build) would have created about 32,000 new daily transit trips and eliminated about 22,000 automobile trips.

So we’re talking about roughly 10,000 new trips daily or about 5,000 people who gain access they otherwise wouldn’t have. That’s basically microscopic in the context of the total New Jersey New York City commuting pool (hundreds of thousands)…

To summarize, ARC’s impact on access was to be on the order of 1%.

Now, there’s a good argument that the tunnel would have made the trip more pleasant for commuters: faster and easier, less crowded, fewer delays – certainly for transit users and to a lesser degree for drivers as well. But if that’s the case, why weren’t commuters paying for this via higher fares?

I’m not the savvy political type, but when Christie killed this project it seemed to me that it was more of a “screw New York” attitude. Thing is, the project would’ve been good for the REGION. Thank you, Mr Christie.

It took a while, but the truth is finally known. As part of the fallout for Christie’s “payback” to the mayor of Fort Lee for his failure to endorse him in the 2013 election, a NY Times investigation has revealed the following:

“Mr. Christie also used the agency [the Port Authority] to help him out of political jams. When he came into office, his state’s Transportation Trust Fund, traditionally financed by the gas tax, was nearly empty. But Mr. Christie, as a candidate, had pledged not to raise taxes. The Port Authority’s involvement in a major project, it turned out, presented a perfect solution.

In 2010, Mr. Christie canceled construction on a planned railroad tunnel under the Hudson River that would have eased congestion for Amtrak and New Jersey Transit trains, and used $1.8 billion that the Port Authority had planned to spend on it to fill the trust fund.”

So his cover story (cost containment) is as big a lie as everything else he’s promised the public.